Lost in Time – Philippine Shoemaking’s Future

This pandemic has given me time to reflect and analyze further the situation of our industry, which is probably applicable to other handcrafting industries as well, and why our situation is so dire. For a long time now, I have been advocating the revival and uplifting of heritage industries such as shoemaking as I hail from Marikina City and it is part of our identity. We have identified over previous posts the various types of players in the industry and how they interact with one another. There are makers and business owners, worker artisans and “industry experts”, designers and engineers -each having their own roles and each playing a part in the system.

For those who are unfamiliar with how majority of the shoes in Marikina are produced, let me give a short briefing on it. Majority of the shoes produced are usually done by hand, making the process labor intensive and slow. While most would appreciate the level of detail that some shoemakers put on their work, speed has become prioritized since most shoemakers are making low value goods. I may not have the exact numbers but only a small percentage of Marikina made shoes are priced at the Php5,000.00 (USD100.00) and up. Since most shoes are handcrafted, the output is really slow as compared to mechanized production line facilities which is found in most exporting countries such as India, Vietnam and China. Majority of the labor force in the industry is contractual, getting paid by the piece and often with no benefits. The piece rates for majority of the small and medium workshops have not improved much, if at all, in the last 10 years. Because of this, the craft is hardly enticing for the younger generation to consider as a career. That is just one side of the concern, since older makers are protective of their livelihoods, majority of the skills and experience that are important in maintaining the quality of the output are lost. Without a functional artisans’ guild to manage the situation and become a voice for artisans, these concerns are not being addressed. Right now commercial interest is king. And with this pandemic that we are facing, securing the capitalist took priority to protecting the worker-artisan . How the industry is run and majority of the public funding spent for research and development is primarily focused on developing the mass production line, neglecting that majority of local shoemakers are backyard/micro makers who primarily depend of artisan-workers as the primary mode of production.

When treating artisan workers as a production unit, one can either assign a flat value (piece rate) or a variable value (daily waged/time based contract) to their outputs. Before we it was called the “gig economy” it was known as the “freelance market” and even before that most local manufacturing operations already had “pakyawan”. Pakyawan, or piece rate, is way ahead of it’s time. It introduced the concept of a freelance artisan with skills who can freely choose which project to take, which employer to work with. It sounds good in concept because it gives the artisan worker lots of choices with regards to work. It also gives the artisan worker flexible working hours, meaning the more hours you put in the more earnings you take home. It worked back then and artisan workers earned a lot because of certain protectionist policies in place during the 70s and 80s. To compare it to modern times, I’d state the example of being an Uber driver when it was starting here. Great earning potential if you’re willing to put hours into it. The system worked because the ecosystem where it operated in is favorable. But times change, and business models evolve. The industry never really industrialized because it didn’t need to. Mostly everybody was happy with the status quo. Until the economy was opened up. Imported shoes became cheaper, more accessible, and with the evolution of the mall industry industry requirements changed. The economy required faster production with capitalized suppliers, most of which are lacking in most local manufacturers. Of those who are capable of partially mechanized production, their problems were of a different sort. Union organizers infiltrated manufacturing firms and held labor strikes. What these labor strikes left were a trauma to local business owners who either ceased operations or shifted labor practices from regularized workers to contractual labor. Government policy also shifted, declaring piece rate labor legal in manufacturing sectors which included garments and shoemaking. Because of the piece rate system, most workshop owners have mitigated risks by limiting labor costs to only what was produced. This thus became a protection mechanism deployed by businesses which continues to persist even up to today with other industries as well. And labor unions back in the 90s ran out of workers to organize and “fight for” anymore. There can be no labor union if there are no regular workers after all. Why do you think it’s so hard to address the labor issue of labor contractualization?

Since failing to industrialize, our methods have been stuck in time. This model was applicable during the trade protectionism era where imported shoes were scarce. Now that we are a liberalized economy (too liberalized IMO), the industry which has been coddled has no way of protecting itself from the onslaught of imported brands which come from industrialized production facilities which can scale better in terms of build and quality due to the assistance of technology. Whereas a local artisan-worker in a production line can process 5 to 8 units per day (using a task based handcrafted production line method; men’s formal shoes), a mechanized line can go through at least 15 units per hour. This is the reason why most local producers and brands were eventually pushed out of the malls. The production method doesn’t match the mall business model anymore with fast fashion being the preferred model because of scaling not only in terms of production but also profit. Faster turnovers = more profit after all. But the mall business model is now changing as well. 30 years of dominance in the local market is now being challenged by online marketplaces. Malls know this and have felt a significant shift from physical store purchases to online purchases year on year even before this pandemic hit. With this shift, warehousing and logistics have also changed. Now, a brand can operate from a single depot to ship out when an order comes in. No need to stock up per mall which reduces the risk of overstocking for the brand. Smaller quantities and a wider range of styles can then be developed.

Outdated Bottomline

I know that anyone starting or operating a business would do so for the profits. There is no question that it should be one of the priorities of any business. But times change, and the situation 40 years ago is no longer applicable. The profitability of shoe production, as with any business, lies with scaling. Scaling in either quantities produced or pricing is needed in order to create growth and profitability. The conditions for either is lacking in our local shoemaking environment. We cannot produce enough to address the market requirements, we cannot produce better quality for it to be export viable. It’s kind of a lose-lose situation for our industry. The regular shoes produced by your basic backyard workshop here usually produces a weird mix of quality levels because of the material choices. Skill level wise, the artisan-worker can assemble a proper shoe but less afterthought is given to material choices and product longevity. Material choice matters as much as construction method.

Think about it, how many real in-house manufacturing brands are out there in the local market? The bigger players have been importing shoes from China since the late 90s – early 2000’s because local production cannot keep up with the market demand in terms of quantity, style, and quality. When there was an abundance of labor back in the 90s, pursuing a purely profit based business model is viable. Now, 20 years since the industry started to lose against importation, proper shoemakers are getting rarer and rarer. My meaning for a “proper shoemaker” is one who can build a shoe from scratch including last making and pattern making, not someone who is part of the production process. The environment the past 20 years has caused the workforce quality to be generally lower while also lowering it’s population to the point wherein you have an aging artisan population with the younger ones not learning enough skills to continue improving the industry. While profit generation is an important goal, it is ultimately a shortsighted goal especially if it is primarily THE only goal especially in our situation. There is a diminishing return with a sharper curve when profit is made primary goal of an economic endeavor. Without looking into business sustainability, once the primary resource is exhausted the business growth stalls. Right now the reality is that our industry is running out of technically competent artisan workers who can make footwear which can compete in the global market. Most businesses operate with a profit oriented bottomline while not reinvesting the money in human development which is required to fuel not even growth but just to sustain the economic activity in the next 10 years.

I know that the idea of sustainable development has been around for many years. I mean I studied about it back in college and that was already 20 years ago. Sadly, the industry hardly considered a sustainable path to develop the industry. Most active and influential players push for automation/industrialization if they are into manufacturing while most capitalists (big brands, malls, entrepreneurs) have opted to develop their businesses further by jumping over and ignoring the problem completely by importing goods from China rather than work with the local industries to develop and strengthen it. The end result is a this, a weakened local shoemaking industry with minimal manufacturing capability to push for export which is key to progressing our economy, both local and national. A profit based bottomline has a side effect of creating innovation and economic progress for all; a human development based bottomline always aims for innovation and economic progress for all with profit as a side effect. Not all artisan workers can become entrepreneurs who can be responsible for themselves and others. Not all businesses are responsible to their workers and the industry. Shoemaking has become a means to an end for most, because modern society and culture has encouraged this thinking. Government also behaves the same way so the actual consultations happen with big businesses and “industry experts” who have no real experience in handling a shoemaking business. Both government resources out to develop their own interests which is why after how many years and millions of Pesos spent by DTI, the industry is still lagging behind globally in terms of innovation, quality, and competency.

Why am I so persistent with this idea? I’m sure a lot of you are asking why I’m like an old broken record player who keeps repeating and repeating the same old thing over and over again. There are those in the industry who are saying that I am badmouthing and bringing ruin to the industry’s reputation. And I know that a lot of people do not want to hear what I’m saying. But going 8 years into shoemaking (20+ years in the industry) and I don’t see any innovations and development for the artisan-workers and the craft brings a really sour taste to the air. What we have achieved and what I hoped was to become an example for future entrepreneurs was just used as a marketing launchpad. Supporting local should not mean supporting an oppressive local practice. Supporting local should not mean supporting a brand which only subcontracts the product out to suppliers without actively ensuring that the products are developed and produced ethically and sustainably. Modern marketing brands are claiming “Marikina” but they are not the workshop owners. For most of them, their responsibility ends when they pay the workshop owner the agreed upon cost without much thought how much of the actual maker makes. All because of an outdated bottomline which is so 1980s. All because there is no plan or goal except to make and expand profit using a tired old business model.

Investing in the Future

Marikina can pursue two (2) strategies in order to cope with the future, and both involve heavy investments into research, development, and training. Looking at it from an industry perspective, development must be inclusive in order to better the lives of stakeholders, and not just business owners. I have talked about the professionalization of shoemaking as a profession in order to make it into a career viable endeavor for the youth to consider. What leaders of the industry should understand is that there are other markets available to shoemaking and not just the mass production model which they have been striving to develop for decades. Decades of investment which has not yielded positive results overall because while the business sector might have developed, the labor sector and sustainability strategy is neglected. If you would look at the financial data, the industry can be considered as “thriving”. But upon closer inspection, majority of the shoes sold locally are actually imported shoes. Even major local brands often import shoes in order to be able to have a stable supply chain. Majority of locally made shoes also make use of imported leathers (usually stock lot leather from China) because local tanneries cannot supply cheap leather for mass production and lack proper quality control measures which is needed for a uniform production. Commercial interests keep us from investing in the future because most business owners are apprehensive to put more money into an unsure future. Which is why we have to invest in developing the industry in order to move forward into the future instead of trying to squeeze our way into the present.

There are two paths to develop the footwear industry’s future. Mass production of existing lines/styles should be a secondary consideration since the strategy that was being employed by “footwear experts” often focus on replicating processes and strategies employed by mass producing countries such as China and India. While this can be a viable strategy, it would entail fighting against established production lines who have access to cheaper materials, labor, and power. We primarily import our raw materials which puts us at a disadvantage since a disruption in the international supply chain can easily cripple us. What we can invest in is the research and development of new technologies and business models which employ medium to mass scale production. So for the first path, we can invest in R&D for new product development using existing technologies here locally. A great example of this is the brand EasySoft by World Balance. What they have done is to create an entirely new product line by using existing technologies and simplifying the production process, which is able to compete against cheap and imported products. Innovation in the production process using locally developed technologies and strategies is key. Specialized manufacturing using current 3D technologies can be another avenue to develop. Innovating on design and features while addressing market opportunities missed by imported mass production shoes is key to our future for local as well as export opportunities. In order to move towards the future of the industry, we should start leading instead of trying to play catchup to established players.

The second path is developing our slow production. These would require investing in human skills development rather than developing processes and technologies for medium to mass production. There will always be a worldwide niche for quality handcrafted goods. Whatever the economic system, a master crafted pair commands a vastly higher price as compared to mass produced variants. So instead of streamlining and developing strategies to improve quantities produced, here we develop skills in order to improve overall product quality using traditional means. Semi-bespoke shoes command a high price especially in the international markets. Investing in developing shoemakers who can be considered as masters will bring a great boost in local economy. First train and develop shoemaking masters, then sponsor roadshows so that Philippine shoemaking will be reintroduced to the world. This would also professionalize the craft which ensures that the shoemakers also get a fair share of the revenue generated, making the profession more attractive for the youth to pursue as well.

So for the future of Marikina or the shoe industry in general, we must specialize and look for gaps left in the market and develop those gaps into viable niches. We can also create entirely new products to compete in traditional markets. Both strategies require us to shift our perspective from a follower to an innovator and leader in the global industry. Innovate in design and production, lead in traditional skill and creativity.

Reality Check

While we take pride in making our locally made handcrafted shoes, the value assigned to them are not reflective of what it should be. Our industry is stuck in a situation wherein we employ traditional processes operating in a modern marketing environment. Scaling is a big problem and while online selling has provided a bit of relief for some producers and created new opportunities for resellers and marketing brands, it is a bandaid solution again to a chronic issue. The business side is viable. Being a marketing brand and reseller can be very lucrative; being a workshop owner can earn a good living; but being an artisan worker is not as attractive profession especially to the youth which will eventually lead to a drain in skilled workers as the current workforce ages and retires without passing on the knowledge and experience to the next generation.

But it is not too late. There is still hope. But business owners (workshops and marketing brands) need to broaden their perspective. It is argued that expanding their market shares are beneficial to the industry, there is merit to that but one cannot discount the fact that our industry is not gaining new skills and talents but rather losing them as experienced makers are retiring, from the industry or from life. The culture of altruism has to be replaced with a culture of innovation. The industry needs to pivot towards innovation instead of playing catchup. Enough with the “pwede na” (this will do) mentality both from business owners and workers. Providing livelihood to an aging skilled workforce is all well and good, but if those skills are not passed on to the future generation of artisan workers the production/manufacturing industry will continue to shrink. We can turn this around, but all players should accept this reality and pivot towards change instead of surrendering to the situation and squeezing every bit of profit from it as long as they can.

There is a popular quote/prayer from Reinhold Niebuhr: “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.” We can change and innovate the industry, that is why I will never really stop saying that we have to stop the “nakasanayan” and look for new ways to invigorate the craft and industry. There are a lot things that I cannot change alone, but if everyone just wished and worked towards a common goal for the industry’s future I am sure that we’ll make changes that will elevate the craft and industry.

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